Otto Thoresen remains upbeat despite Aegon's £11m loss

Published on Thursday 12 November 2009 19:46

OTTO Thoresen, chief executive of life and pensions group Aegon UK, yesterday said there "signs of confidence" returning to the market as it reported mixed third-quarter results.

While Dutch parent Aegon NV reported a profit for the third quarter, underlying earnings in its UK division fell compared with the same period last year to a loss of 11 million.

This was mainly due to a one-off 38m charge spent to improve customer records. Otherwise, the group said, it had seen a "strong recovery" in earnings for the quarter to 27m, up 59 per cent on the previous quarter and in line with the same quarter last year, which was 28m.

Thoresen said the 38m was spent to strengthen its capability to compete in the popular market for self-invested pension products (Sipps).

"Demographics are pushing strongly in a direction of more demand for those products and services," said Thoresen.

However, the value of new business, a key measure of profitability, was down 36 per cent on the year to 29m, while life and pensions new business volumes decreased 2 per cent in the quarter on the previous one to 218m API.

Thoresen explained that some of the reductions in volumes were to be expected due to the lower stock markets in comparison with last year. "But underlying levels of transactions are steady," he said.

The asset management division, headed by Andrew Fleming took in 419m in the quarter, boosted by two large institutional mandate wins of 227m and 160m. It was the biggest quarterly intake for the group in two years.

"The fact is, we are managing money drawn from European clients here in Edinburgh and that is a really good news story," said Thoresen.

Total assets under management for the UK group reached its highest level to date at 54.2 billion.

Thoresen expects the run up to the general election will make retirement savings a hot topic as the government struggles to handle UK pension provision under record levels of debt.

He said it was time that the UK got "serious" about how the UK deals with pensions.

He said the pension debate up until now has been "very sound and sensible, but it has been quite forgettable", but that this has changed. "Some of those issues are about having to work longer and save more," said Thoresen.

"That is just a fact people will have to face up to. From our point of view, we want to play a big part in that."

In signs that the European life and pensions sector was seeing recovery, Aegon NV's profit was its first since the financial crisis became most acute last autumn.

Net profit was 145m (130.2m) , compared with a loss of 329m in the same period a year ago, as losses on investments and asset impairments eased.